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close this bookToward Gender Equality: The Role of Public Policy (WB, 1995, 88 p.)
close this folderChapter two
View the documentGender Inequalities Hamper Growth
View the documentHousehold and Intrahousehold Resource Allocation
View the documentLinkages between Education Health, and Nutritious
View the documentHousehold and Labor Market Linkages
View the documentFormal Sector Employment
View the documentInformal Sector
View the documentAccess to Financial Markets
View the documentAccess to Lund and Property
View the documentAccess to Extension Services
View the documentConclusion

Access to Financial Markets

The availability of financial services and access to them are considered important for several reasons. First. savings provide a kind of self-insurance. Second, credit helps households maintain a certain level of consumption at those times when their income fluctuates temporarily. Third, credit can be used to fund investments in capital or other inputs that will yield relatively high returns to production. if households cannot finance such investments from their own savings. A fourth and no less important reason is the role of savings and credit in increasing household members' options outside the home.

Inequalities between women and men in access to financial services- particularly credit--are widely documented. Collateral requirements, high transaction costs. limited mobility and education, and other social and cultural barriers contribute to women's inability to obtain credit (Holt and Ribe 1991). The implications tot household efficiency and individual well-being differ, however, depending on whether the household pools its financial resources. If, as the unitary household model assumes. a household pools its resources the characteristics of individual borrowers are less important than if there is little or no pooling. In the first case. credit resources will be used to meet household needs that have been jointly determined, regardless of who the borrower is. In the second case, the use credit is put to and the needs it then satisfies depend on which household member is borrowing.

A recent study of credit programs in Bangladesh sponsored by the World Bank shows that providing credit directly to women has a positive effect on variables typically associated with household and individual welfare and improved gender equality (Pitt and Khandker 1995). The study looks at three programs in Bangladesh: the Grameen Bank. the Bangladesh Rural Advancement Committee (BRAC), and the Bangladesh Rural Development Board (BRDB). in 1992, women accounted for 94 percent of Grameen Bank members. 82 percent of BRAC members. and 68 percent of BRDB members (Khandker and Khalily 1995; Khandker, Lavy, and Filmer 1994). Only the results for the Grameen Bank are presented here.

Table 2.4 presents the impact of credit obtained by women and men on a variety of social and economic indicators. The results show a clear and positive impact of both male and female borrowing on all indicators of Toward gender equality family welfare especially through an increase in per capita expenditures increases in both boys' and girls schooling, anti a reduction in fertility. Females borrowing has a greater effect on girls' schooling anti per capita expenditure than does male loot-rowing: male borrowing has a greater effect on boys' schooling and fertility than does female borrowing. Interestingly. female borrowing also results in mote female ownership of nonoland assets and an increased supply of female labor to cash - income -earning activities (Pitt and Khandker 1995).

Loans to Women and Men Have Important Welfare Implications.

Table 2 4 welfare effects of Grameen Bank loans (percentage increase)

Welfare e change

Effect of male borrowing

Effect female borrowing

Increase in boys' schooling



Increase in girls schooling



Increase in per capital expenditure



Reduction in recent fertility



Increase in women's labor supply to cash-income earning activities



Increase in women nonland assents



The introduction of programs such as the Grameen Bank in a village has a positive effect on agricultural and nonagricultural production (Khatidketati Chowdhuty 1994: Rahman and Khandke 1994 The probability that women will be self-employed rather than work for wages increases by 52 percent. The latter finding is important because much of the wage employment open to women in rural areas is very poorly remunerated and can be quite exploitative. Self employment can bring the opportunity of higher returns for women, plus the freedom to integrate their earning activities into other work as they see fit.

Access to financial services alone cannot reduce gender inequalities in the allocation of household resources. A qualitative study reviewing several targeted credit programs in Bangladesh cautions against overgeneralizing about the benefits of giving women access to credit. The study finds that it is difficult to infer that increased borrowing alone improves women's bargaining power because in many rural Bangladesh households the question of who controls the resources is quite complex (Goetz and Sen Gupta 1994). Nevertheless. the possibility of receiving credit (or similarly of working for wages) may give women greater bargaining power within the household. This bargaining power can be used to improve child health and nutrition and may increase the likelihood that children will attend school.